U.S. Supreme Court to Clarify False Claims Act's "First-to-File" Bar

October 8, 2014

The U.S. Supreme Court has agreed to resolve a growing Circuit split regarding the False Claims Act (“FCA”)’s “first-to-file bar,” a move that promises healthcare providers increased certainty in evaluating exposure to FCA litigation risks.[1]

The FCA imposes liability for knowingly submitting fraudulent claims to the federal government. Healthcare providers across the country continue to experience increasing FCA litigation stemming from improper healthcare reimbursement claims.

The False Claim Act’s first-to-file bar provides that “when a person brings an action under [the FCA], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”[2] In the midst of increasing FCA litigation, a Circuit split has developed regarding whether this provision bars a person from bringing a related action only while the first-filed action remains pending, or whether subsequent related actions are forever barred. 

The Fourth Circuit [3] has held that the first-to-file bar only precludes subsequent related actions while the original action remains pending. The Fourth Circuit’s holding is consistent both with a 2010 decision from the Seventh Circuit[4] and with dicta from the Tenth,[5] and reasons that the “pending” requirement more effectively advances the policy goal of encouraging relators to file FCA claims.

Conversely, in a marked departure from other Circuits, the D.C. Circuit recently held the first-to-file bar forever precludes all subsequent related actions.[6] The D.C. Circuit reasoned that neither a “pending” limitation on the bar’s operation nor the duplicative litigation such a limitation invites vindicates the FCA’s goal of encouraging timely disclosure of fraud against the government.

Clearly, healthcare providers’ interests will best be served by the limited exposure that will result if the Supreme Court finds – like the D.C. Circuit – that the first-to-file bar forever precludes subsequent related actions. Regardless of which interpretation is endorsed, however, the Supreme Court’s ruling will offer providers some level of certainty when evaluating FCA litigation risks.


[1] See Kellogg Brown & Root Svcs., Inc. v. United States ex rel. Carter, 134 S. Ct. 2899 (2014) (granting cert.)

[2] 31 U.S.C. § 3730(b)(5).

[3] A separate Certiorari Petition from the Fourth Circuit on the same issue also is pending. United States ex rel. May v. Purdue Pharma L.P., 737 F.3d 908, 920 (4th Cir. 2013), cert. petition filed Mar. 25, 2014.

[4] United States ex rel. Chovanec v. Apria Healthcare Group, Inc., 606 F.3d 361, 365 (7th Cir. 2010).

[5] In re Natural Gas Royalties Qui Tam Litig., 566 F.3d 956, 963 (10th Cir. 2009).

[6] United States ex rel. Shea v. Cellco P’ship, 748 F.3d 338 (D.C. Cir. 2014) (Srinivasan, J., dissenting), rehearing en banc denied July 16, 2014, cert. petition filed Aug. 26, 2014.
 

[1] See Kellogg Brown & Root Svcs., Inc. v. United States ex rel. Carter, 134 S. Ct. 2899 (2014) (granting cert.)

[2] 31 U.S.C. § 3730(b)(5).

[3] A separate Certiorari Petition from the Fourth Circuit on the same issue also is pending. United States ex rel. May v. Purdue Pharma L.P., 737 F.3d 908, 920 (4th Cir. 2013), cert. petition filed Mar. 25, 2014.

[4] United States ex rel. Chovanec v. Apria Healthcare Group, Inc., 606 F.3d 361, 365 (7th Cir. 2010).

[5] In re Natural Gas Royalties Qui Tam Litig., 566 F.3d 956, 963 (10th Cir. 2009).

[6] United States ex rel. Shea v. Cellco P’ship, 748 F.3d 338 (D.C. Cir. 2014) (Srinivasan, J., dissenting), rehearing en banc denied July 16, 2014, cert. petition filed Aug. 26, 2014.

 

 

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